Amidst the grim real estate market, it is still a good thing to be a real estate investor if you know where to put your money: in the Los Angeles hotel market. This is according to a report from the Jones Lang LaSalle Hotels.

Coinciding with The Phoenix Lodging conference, Jones Lang LaSalle Hotels released Hotel Intelligence Los Angeles. Hotel Intelligence Los Angeles serves as the first in a series of reports covering the U.S. hotel market. The said series will identify not only investment opportunities but market trends as well.

In the report, it mentions that the Los Angeles hotel market is a key global gateway market. It consists of 98,000 rooms in over 20 submarkets. Because its gross metro product is almost equivalent to the 20th largest economy in the world, the Los Angeles hotel market became a target of investor interest.

Proof that the Los Angeles hotel market is really on the get go is the fact that high-profile properties have traded in the last cycle in large numbers. The fact that high profile assets (such as Sheraton Universal and Sheraton Delfina) being introduced into the market are growing in quantities solidifies the report on the hotel market of Los Angeles. Indeed, hotel investor outlook in Los Angeles is positive.

Managing director for Jones Lang LaSalle Hotels in Los Angeles, John Strauss, says the demand is not only improving (especially for the corporate segments and key group), but supply pipeline is being kept in check because of low construction debt financing. Deals in the hotel market have already improved, with numbers growing four times versus 2009’s minimal volumes. The deals have already reached $154 million year-to-date in 2010.

The trend for Los Angeles is that more Asian-based investors are coming in. They comprise 70% of the 2010 acquisitions. The two most active buyers will be the U.S. REITs, which have recently seen capital raises, and offshore buyers, which are mostly Asians with long-term hold strategy.

Despite the staggering market declines last year, hotel cash flows are still improving. Even financing through debt is becoming increasingly available.

Strauss says, “Investors looking for hotel product today are most attracted to brand unencumbered, fee-simple opportunities that are being offered at significant discounts to peak values and replacement costs. However, many “big box” and high-profile hotels in Los Angeles are held by well-capitalized, long-term owners who are able to navigate the downturn or conversely restructure or extend debt for several years.”

Average daily rates in Los Angeles are increasing, maintaining its status as a sought-after destination for lodging investments. With recent upgrades, renovations, and luxury additions, this status will further be reinforced.